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Ofcom fines telecoms firm maximum penalty

Ofcom today fined London-based firm Continental Telecom the maximum £50,000 for failing to provide information to Ofcom, as part of its investigation into the firm for landline mis-selling.

On 4 October, Ofcom formally requested Continental Telecom to provide information about its turnover so that should Ofcom decide to impose a financial penalty for breaching landline mis-selling rules, it could calculate the maximum level of any fine, which is based on turnover.

Information about a company’s turnover is usually filed with Companies House.  However, Continental Telecom had not filed its accounts.

Court threat

Continental Telecom, based in south-west London, did not supply the required information and, on 25 October, Ofcom issued the company with a second notification requiring them to supply the information by 25 November, and warning them that they could be fined up to £50,000, or face court action if they did not do so.

Continental Telecom has, to date, failed to supply the information.  Section 139 of the Communications Act 2003 allows Ofcom to fine up to £50,000 for failing to provide information in these circumstances.

Continental Telecom has until 14 January 2011 to pay the fine.

Landline mis-selling investigation

Ofcom opened an investigation into Continental Telecom on 15 February 2010 following an increase in complaints about customers being mis-led into signing up to Continental Telecom’s landline services.

In June 2010, Ofcom concluded that it had reasonable grounds to believe that Continental Telecom had:

  • used unacceptable sales tactics to get consumers to sign up to its deals;
  • failed to tell customers of their right to cancel during the switchover process;
  • abused the trust of vulnerable customers, including the elderly, people with special needs and those whose first language is not English; and
  • cut customers off for alleged non-payment of bills without giving them due warning.

Continental Telecom was required to take steps to comply with Ofcom’s rules (General Condition 24), to allow affected customers to end their contracts without charge and to refund fees to customers who had paid to transfer to another provider.  It also had to reconnect suspended and disconnected customers urgently.

Consumer protection regulations

In November 2010, Ofcom issued a further Notification to the firm as it continued to breach consumer protection regulations.

The Notification requires Continental Telecom to take specific actions to remedy the consequences of its non-compliance with the rules by 2 December.

Ofcom is presently considering Continental Telecom’s compliance with this Notification and whether any further action is appropriate. Further enforcement may include issuing a further financial penalty of up to 10 per cent of relevant turnover, or taking the company to court.

Click here for further information about the investigation

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